The number of Americans applying for unemployment benefits fell last week as layoffs remained historically low despite the Federal Reserve’s efforts to loosen the labor market. Jobless claims for the week ending May 18 fell by 8,000 to 215,000, down from 223,000 the week before, the Labor Department reported Thursday.
Quick Read
- Jobless Claims Drop:
- Unemployment benefit applications fell by 8,000 to 215,000 for the week ending May 18.
- Previous week’s claims were 223,000.
- Four-week average increased by 1,750 to 219,750.
- Layoffs Remain Low:
- Weekly claims serve as a proxy for layoffs and future job market trends.
- Claims have stayed at historically low levels since the COVID-19 pandemic hit in spring 2020.
- Federal Reserve Actions:
- Raised benchmark borrowing rate 11 times since March 2022 to combat high inflation.
- Intended to loosen the labor market and slow wage growth.
- Labor Market Trends:
- April saw the addition of 175,000 jobs, the fewest in six months.
- Unemployment rate rose slightly to 3.9% from 3.8%.
- Unemployment rate has been below 4% for 27 consecutive months.
- Job Openings:
- 8.5 million job openings reported in March, the lowest in three years.
- Potential Rate Cut Indicators:
- Slower hiring and wage growth might lead to a Federal Reserve rate cut.
- Cooler April consumer inflation reading could influence the Fed’s decision.
- Recent Layoffs:
- Tech and media companies, including Alphabet, Apple, and eBay, announced layoffs.
- Other companies like Walmart, Peloton, Stellantis, Nike, and Tesla also announced job cuts.
- Jobless Benefits:
- 1.79 million Americans were collecting jobless benefits for the week ending May 11.
- This is an increase of 8,000 from the previous week and 84,000 more than a year ago.
The Associated Press has the story:
US applications for jobless benefits fall as labor market continues to thrive
Newslooks- (AP)
The number of Americans applying for unemployment benefits fell last week as layoffs remained historically low despite the Federal Reserve’s efforts to loosen the labor market.
Jobless claims for the week ending May 18 fell by 8,000 to 215,000, down from 223,000 the week before, the Labor Department reported Thursday.
The four-week average of claims, which softens some of the week-to-week volatility, rose a modest 1,750 to 219,750.
Weekly unemployment claims are considered a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since millions of jobs were lost when the COVID-19 pandemic hit the U.S. in the spring of 2020.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in a bid to stifle the four-decade high inflation that took hold after the economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was to loosen the labor market and cool wage growth, which can fuel inflation.
Many economists thought there was a chance the rapid rate hikes could cause a recession, but jobs remain plentiful and the economy still broadly healthy thanks to strong consumer spending.
In April, U.S. employers added just 175,000 jobs, the fewest in six months and a sign that the labor market may be finally cooling off. The unemployment rate inched back up to 3.9% from 3.8% and has now remained below 4% for 27 straight months, the longest such streak since the 1960s.
The government also recently reported 8.5 million job openings in March, the lowest number of vacancies in three years.
Moderation in the pace of hiring, along with a slowdown in wage growth, could give the Fed the data its been seeking in order to finally issue a cut to interest rates. A cooler reading on consumer inflation in April could also play into the Fed’s next rate decision.
Though layoffs remain at low levels, companies have been announcing more job cuts recently, mostly across technology and media. Google parent company Alphabet, Apple and eBay have all recently announced layoffs.
Outside of tech and media, Walmart, Peloton, Stellantis, Nike and Tesla have recently announced job cuts.
In total, 1.79 million Americans were collecting jobless benefits during the week that ended May 11. That’s from up 8,000 from the previous week and 84,000 more than the same time one year ago.
